Embraer sees "faint signals" of new commercial activity

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Embraer is cautiously optimistic that it has seen the worst of the global economic crisis and that its commercial aviation business will start improving in a few months.

The Brazilian airframer is seeing "faint signals of some activity", said Embraer president and chief executive Fred Curado during a conference call to discuss the firm's first quarter net loss of $23.4 million.

The commercial landscape is "definitely more encouraging than the last time we spoke", he adds.

A pending deal to provide Aerolineas Argentinas with 22 Embraer 190s "is a very important campaign for us", says Curado.

The Embraer chief notes, however, that the deal - backed by Brazilian development bank BNDES - represents a "niche opportunity" since the airline "has desperate need for re-fleeting". As such, he says, the Aerolineas arrangement should not be seen as a definitive indicator that the market is on the upturn.

Nonetheless, Embraer "may be reaching a level now thathopefully the situation will start improving in a few months from now".

To assist with financing, Embraer will continue to depend on BNDES to support some clients. The airframer estimates that 25% of its 2009 deliveries will be financed by the bank.

The global recession has taken a significant toll on Embraer's business jet dealings. Fewer deliveries of business jets meant first quarter net revenue for the executive aviation segment fell 60% to $70.2 million.

While Curado does not see the business aviation segment improving dramatically, he does not believe it will get worse than the present "at least from our product line".